Best Bang for Your Buck

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Buying an inexpensive, unrestored house then spending money to fix it up and unload the property at a premium to pocket gains sounds like a plausible deal driven by hard work, upfront funds and a little luck. The property location wouldn’t seem like a major factor.

But think again.

Sioux Falls, South Dakota, leads the nation for 2018 in Best Places to Flip Houses, according to a new survey from online personal finance company WalletHub. The moderate-sized Midwestern city joins several other smaller metro areas including Fort Wayne, Indiana; Missoula, Montana; and Des Moines, Iowa; in the top 10. Columbia and Charleston, South Carolina, placed 20th and 21st, with Columbia scoring best on lower renovation and remodeling costs and Charleston benefiting on higher quality of life. Columbus, Georgia, places at the top of a third category, market potential.

Meanwhile, Bridgeport, Connecticut, finished 172 (last) in the findings along with New York, Oakland, San Francisco and Boston in the bottom 10.

WalletHub also points out that Pittsburgh ranks highest in average return on investment at 145.45 percent or 24.5 times higher than in Montgomery, Alabama—lowest at 5.93 percent. Looked at another way, a $100,000 investment would reap $245,450 in Pittsburgh and $105,930 in Montgomery.

All the same, expect a moderate payoff no matter the locale, the Internet researcher says.

“Any experienced home flipper would caution you that transforming a fixer-upper into a profitable property is a difficult process,” according to WalletHub. “In other words, don’t get your hands dirty until you’ve learned a thing or two about real estate, construction and how much damage your project could do to your wallet.”

The average nationwide gross profit—which doesn’t include renovation costs—works out to $68,143, the firm says. But it also warns, “Breathing new life into a low-cost property won’t necessarily return your full investment and allow you to pocket another $68,143.”

WalletHub has another piece of advice: “According to RealtyTrac, the current homeownership rate is 64.2 percent (down from a high of 69.20 percent in 2004). That may translate to fewer potential buyers off the bat, depending on the location of your property.”

The information firm says it scanned over 170 U.S. cities across 27 statistics, including median purchase price, average full home remodeling costs and a housing-market health index.

By category, Mobile, Alabama, posts the lowest median purchase price at $50,000, compared with $730,000 in San Jose. Meanwhile, Memphis reports the highest share of home flips, 12.76 percent, while Albuquerque, New Mexico, was lowest at 1.35 percent. Also Little Rock, Arkansas, has the lowest average home remodeling costs at $75,888 which is five times lower than Atlanta at $375,734.

Also Charleston has the most real-estate agents per 100,000 residents at 184, while Warwick and Providence, both in Rhode Island, tied for the fewest at 9.

Go to https://wallethub.com/edu/best-cities-to-flip-houses/23158/

A separate report from Attom Data Solutions found that 207,088 homes and condos were flipped last year. That’s up 1 percent from 2016 to an 11 year high, according to an article in the Washington Post. The flipped homes in 2017 made up 5.9 percent of all house sales (nearly 3 of every 50), the highest percent since 2013, says Irvine, California-based Attom Data Solutions.

Of metro areas with 1 million or more people, Memphis lead in home flipping rate last year at 12.8 percent of all sales followed by Las Vegas at 9.1 percent; Tampa-St. Petersburg, 9 percent; Birmingham, 8.6 percent; and Phoenix, 8.5 percent. The District of Columbia region was 6.1 percent of all sales, up 3 from 2016.

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